YOUR COMPANY IS LOOKING FOR SHORT-TERM FINANCING VIA A SPECIALIZED BRIDGE LOAN!
COMMERCIAL SHORT TERM FINANCING BRIDGE LOAN SOLUTIONS
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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WHAT IS A BRIDGE LOAN
Short-term financing needs often drive business Finance needs. That kind of ' specialized financing ' via bridge loans can sometimes best be described as ' out of the box ' strategies normally not in the realm of traditional bank financing.
HOW CAN BRIDGE LOANS HELP YOUR BUSINESS
So how can the owner/financial manager address the need for a short-term loan or bridge loan that solves immediate problems via a funding process that works as an alternative to a conventional loan ? Those bridge loan solutions are short-term in nature, typically between 3 and 12 months. They can be used to refinance debt and assist in growing sales when non-traditional sources of financing are not available.
BRIDGE LOANS VS TRADITIONAL LOANS
How then do we identify the providers of this type of financing? It's rarely a 'check the Yellow Pages' solution! While Canadian banks drive traditional financing insurance companies, government, etc. it's a challenge for firms seeking SME COMMERCIAL FINANCE needs.
We suppose you might be able to call the government BIL/CSBF program specialized finance, but it is certainly not short term in nature and come with monthly payments under a term loan structure ... in effect, it’s a term loan via long term financing with significant government guarantees to the financial institution providing that financing, i.e. the bank. A typical loan term is 3-5 years and authorized lenders charge a 1 time 2% fee for the loan when approved for this type of long-term funding. Unliked a higher interest rate via alternative financiers this type of loan is very competitive and is offered by most banks and tied to the prime rate.
WHO OFFERS BRIDGE LOANS? WILL THIS FINANCING WORK FOR YOUR BUSINESS?
So while the bank highly prizes the guarantee this clearly is not a specialized finance program that meets the needs of short-term financing which often revolves around working capital and cash flow needs via short term loans with a higher interest rate from other lenders.
Some situations are severe, and might even require what's known as ' debtor in possession financing ‘, aka ' DIP '. This allows larger firms who have challenges to operate while in the process of making proposals or arrangements with creditors. This ‘last stand' type of financing is clearly not where you want to be, but many medium-sized and larger companies emerge successfully from this process.
What then are better options for releasing cash flow and putting the fix into working capital shortages with a repayment method that works for your business?
The answer? Your assets! Gaining liquidity from assets that are unencumbered is, in many cases, the final emergency fix. Longer-term assets such as equipment, real estate, etc can employ the ' sale leaseback ' scenario to release cash while still using and ultimately owning again those assets.
HOW LONG DOES IT TAKE TO GET A BRIDGE LOAN - DO YOU QUALIFY FOR A BRIDGE FUNDING SOLUTION?
Bridge loans typically have a faster application process with faster closing dates although financing fees and bridge loan rates and costs are higher than the funding provided by traditional financial institutions - Loan terms are typically 1 year with provisions for extension and repayment based on a fixed pay off date based on the company's specific needs. The funding will come with higher finance and closing costs/ legal fees as we have mentioned for this type of ' gap financing ' when compared with traditional loans.
That's asset monetization at its best. Almost any asset can be refinanced, including equipment, tech assets, rolling stock, real estate, etc. Either a bridge loan or a lease or mortgage can usually accommodate the financing paperwork. In certain cases, appraisals might be required as they protect both the lender and the company.
ALTERNATIVE TO BRIDGE FINANCING / GAP FINANCING
Short term financing needs to bridge the gap are often required by firms who are in the process of exiting traditional bank financing, perhaps after they have been placed in 'Special Loans’. In effect, the bank relationship is over. Asset-based ' ABL ' loans are the perfect solution if your company finds itself in 'Special Loans‘. Spoiler alert - it won't make you feel that 'special.'
ADVANTAGES OF SHORT TERM BUSINESS FINANCE SOLUTIONS / TYPES OF BRIDGE LOANS
Receivables Finance / A/R Financing
Inventory Loans
SR&ED bridge loans - Click here for more info on SRED LOANS
Real Estate Bridge Loans / Construction loan financing - a real estate bridge loan is a common use of gap financing
CONCLUSION - IS A BRIDGE LOAN RIGHT FOR YOUR BUSINESS
Short-term financing in Canada is specialized... niche financing. It requires speed, efficiency, expertise in cost and structuring, etc. Speak to 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can assist you in understanding the pros and cons of bridge loans and specialized financing needs and how a bridge loan works for your needs to cover expenses and commitments and meet current obligations.
FAQ: FREQUENTLY ASKED QUESTIONS /PEOPLE ALSO ASK / MORE INFORMATION
What is the definition of a bridge loan?
Bridge loans are a form of business finance with quick access that typically comes with higher interest rates and offer collateral by the borrower in the form of business assets or commercial real estate. Businesses use this type of financing until they find more permanent financing to settle an existing obligation to a lender or in some cases for government arrears.
This type of interim financing provides a solution until more permanent financing is available - Bridge loans are often customized to a company's unique needs. 'Swing loans ' is another term to describe bridge finance solutions as a good option but comes with more a risk to a lender but allows a borrower to meet current obligations.
What are pros and cons of bridge loans? What are Bridge Loan Costs?
Advantages and pros of bridge loan solutions include faster access to cash flow solutions, flexibility around tailored solutions and a shortened approval and underwriting process.
Cons and potential disadvantages include higher rates, down payment requirements in some situations, and the need to provide some form of business collateral.
Click here for the business finance track record of 7 Park Avenue Financial.
